First Tranche of Loans for UIDF Projects Set to Disburse Soon

September 4, 2023

The initial batch of loans to support ongoing projects in tier-2 and tier-3 cities, as part of the Urban Infrastructure Development Fund (UIDF) introduced in the FY24 Budget, is expected to be disbursed shortly. These funds provide low-cost loans to 459 tier-2 cities and 580 tier-3 towns.

States are currently preparing proposals for new projects, with an emphasis on areas such as sewage treatment plants, sewerage networks, water supply, sanitation, and road construction. Additionally, the UIDF funding can be combined with other Ministry schemes like Swachh Bharat Mission and AMRUT.

What is the purpose of the Urban Infrastructure Development Fund (UIDF) announced in the FY24 Budget?

The UIDF aims to provide low-cost loans to support urban infrastructure projects in tier-2 and tier-3 cities in India.

What is the eligibility criteria for cities to access funds from the UIDF?

Cities with populations ranging from 1 lakh to 9,99,999 (tier-2 cities) and 50,000 to 99,999 (tier-3 towns) based on the 2011 Census data are eligible for UIDF funding.

How will cities repay the loans obtained through the UIDF?

Cities must repay the loan amount within seven years from the date of withdrawal in five equal installments, including a two-year moratorium period where interest payments are due at the end of each quarter.

Can UIDF funds be used for any type of urban development project?

No, UIDF funds cannot be used for projects related to maintenance, administrative expenses, housing, power, telecom, urban transport, health, or education, as specified in the guidelines.

How does the UIDF interest rate compare to prevailing bank interest rates?

Cities can obtain loans at a rate 1.5 percentage points lower than the prevailing bank interest rate through the UIDF, making it an attractive financing option for urban development projects.

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